Margin call case raises broad issues

Macquarie Bank
and margin lender Leveraged Equities have appealed against a Federal Court decision that found a Sydney barrister’s shares were unconscionably sold after a ­margin call.

In a case that has broad implications for margin-lending disputes, ­Justice Steven Rares ruled in February that Leveraged Equities had acted ­unconscionably in giving Ross Goodridge less than the three days stipulated in his contract to come up with the cash to meet his call.

He also ruled that the transfer of Mr Goodridge’s margin loan from Macquarie and Leveraged Equities in January 2009 was “legally ineffective". There was nothing unique about the way Mr Goodridge’s loan was transferred, meaning that not only his but 18,500 other transferred margin loans are now in question.

The decision could mean that all ­client transfers from Macquarie to Leveraged Equities could be called into question, and any clients who had shares sold after facing a margin call are entitled to their shares back at current market prices.

Litigation funders have indicated their interest in taking actions as a ­result of the finding.

Justice Rares ordered that Macquarie and Leveraged Equities must buy Mr Goodridge all the units in Macquarie Countrywide Trust that they sold out from under him in March last year after making a call on his ­margin loan. This would cost them more than $3 million at current prices.

Appeals were filed by both Macquarie and Leveraged Equities last month.

Mr Goodridge’s lawyer has previously said that he has been contacted by “in excess of 100" people with Macquarie margin loans who were interested in taking action against the bank.